Squabbles can't stop this industry's growth Telecommunications continue to boom

January 18, 1998|By Mark Ribbing | Mark Ribbing,SUN STAFF

It isn't easy to find agreement in the telecommunications industry these days.

Long-distance phone companies argue with local phone companies over market access. Digital wireless phone companies bicker with each other over product standards. Every new technology, it seems, has ardent defenders and vehement critics.

But the region's telecommunications companies agree on one point -- this year will be another big year for a booming industry.

"The industry will continue to expand, and we don't see any slowing of that," said Steve Chaddick, senior vice president for products and technology at Ciena Corp., a fast-growing network equipment firm based in Linthicum. Perhaps no telecommunications firm in Maryland has more to gain in the coming year than Bell Atlantic, the state's dominant local phone service provider. The company plans to apply this year to the Maryland Public Service Commission and the Federal Communications Commission for permission to offer long-distance services in Maryland.

In making its application, Bell Atlantic will try to succeed where the other so-called Baby Bells have failed. For a Baby Bell to provide long-distance service in a state where it also provides local service, it must pass a checklist spelled out in the landmark 1996 Telecommunications Act. So far, no one has surmounted this hurdle.

Sherry F. Bellamy, the president and chief executive officer of Bell Atlantic-Maryland Inc., said her company is determined to win approval to provide long-distance service. "We want to be the first to actually get through this needle," she said.

On the last day of 1997, a federal court in Texas declared unconstitutional the Telecommunications Act's limitations on Baby Bell long-distance service. While many observers doubt the decision will survive on appeal, it does raise the possibility that Bell Atlantic and its fellow regional phone companies might soon find it easier to break into long distance. Bell Atlantic spokeswoman Shannon Fioravanti said the decision would not cause the company to move up its timetable for offering long distance in Maryland.

While Bellamy said Bell Atlantic, which has about 14,000 employees in Maryland, is in strong financial shape, she added that the long-distance issue will have a significant impact on the company's statewide planning. "I don't see us growing here unless and until we get into long distance," she said. Bellamy said Bell Atlantic is unlikely to raise customers' rates in a period of increasing competition, greater cost efficiency and low inflation. "If rates do anything, they'll go down, not up," she said.

The long-distance companies think Bell Atlantic needs to open up Maryland's local phone market before getting permission to offer long-distance here. C.K. "Chip" Casteel Jr., a public policy executive for MCI Communications Corp., asked, "Will regulators stand tall and do what has to be done? They will be under some considerable political pressure not to do that."

Not that MCI wants every regulator to have a spine of steel: The Washington, D.C.-based company will seek federal approval of its $37 billion merger with WorldCom Inc., a union that could have major consequences for the telecommunications industry worldwide.

Beyond the clashes of telephone titans, Maryland has plenty of telecommunications companies that are poised to take important steps this year.

Both of the state's main cable television companies, TCI Communications Inc. and Comcast Corp., plan rollouts of digital services that promise more channels, clearer pictures and better sound. Both companies will offer new optional set-top boxes. TCI's box will include on-screen programming guides and a parental lockout feature for certain kinds of movies, while Comcast's will give viewers Internet access and other interactive features.

Several other less well-known telecommunications companies are looking to have a big year. One is American Communications Services Inc. (ACSI). Founded in 1995, this Annapolis Junction firm is one of a new wave of telephone companies called competitive local exchange carriers, or CLECs. These companies try to skim off the Baby Bells' most desirable customers, typically businesses, by offering lower rates or faster networks.

This approach has worked nicely for ACSI, which anticipates another year of strong growth. "We're expanding as fast as our capital dollars will allow," said Martin McDermott, a senior vice president at the company.

Another company is Ciena Corp., which specializes in technology that expands the capacity of fiber optic networks. Having set records for its first-year sales and for the valuation of its initial public offering, Ciena is optimistic about the year ahead. "We're very bullish on our prospects," said Ciena President and CEO Patrick Nettles. "We expect to continue to build and continue to grow."

He added that while Ciena has established facilities outside the state, "Our manufacturing plans remain Maryland-centric at the moment."

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